AFP – Eurozone inflation edged down slightly in February to 2.4 per cent, reversing a four-month upward trend thanks to a slowdown in energy price increases, official data showed yesterday.
Last month’s rate was down from 2.5 per cent in January, but it came in higher than the 2.3 per cent predicted by analysts for financial data firm FactSet.
Inflation had reached 1.7 per cent in September, its lowest level in three and a half years, but since October had climbed back above the European Central Bank’s (ECB) two per cent target.
The data will support the ECB’s thinking that price pressures will ease this year as it prepares to cut interest rates again on Thursday.
Core inflation – which strips out volatile energy, food and tobacco prices and is a key indicator for the ECB – also slowed to 2.6 per cent in February, down from 2.7 per cent in January, in line with experts’ expectation.
It will be a welcome drop after core inflation remained stable at 2.7 per cent since September last year.
The ECB’s focus has turned from tackling inflation to boosting the 20-nation single currency area’s economy after sluggish growth in the past two years.
The eurozone economy grew by a mere 0.1 per cent in the fourth quarter of last year.
Inflation has sharply fallen from the record peak of 10.6 per cent, reached in October 2022 after the situation in Ukraine sent energy prices soaring.
But risks remain for Europe’s economy after United States (US) President Donald Trump threatened the EU with higher tariffs and uncertainty over Ukraine’s future.
The outlook for the eurozone’s two biggest economies, Germany and France, appears gloomy for 2025, as the single currency area falls further behind the US and China.
The easing of inflation in February was mainly driven by energy costs, which rose 0.2 per cent year-on-year, a significant slowdown from 1.9 per cent in January.
But food price rises accelerated to 2.7 per cent in February, up from 2.3 per cent in January.
Services sector inflation slowed to 3.7 per cent last month, lower than the 3.9 per cent recorded in January, Eurostat data showed.
Analysts said they expected inflation not to change significantly from current figures.
“We think that headline inflation will remain close to its current level for the next few quarters as energy inflation edges up and food inflation stays above two per cent,” said Deputy Chief Eurozone Economist at Capital Economics Jack Allen-Reynolds.
Consumer price rises in Germany and France greatly differed, according to the data.
France’s inflation slowed to 0.9 per cent in February – the lowest in the eurozone – from 1.8 per cent in January. But in Germany it remained stable at 2.8 per cent.
